23 December 2016
Submission to Senate Standing Economics Committee Inquiry
into the Superannuation (Objective) Bill 2016
John Daley and Brendan Coates
Submission – Inquiry into the Superannuation (Objective) Bill 2016
Summary
We welcome the Senate Standing Committee on Economics
Inquiry into the Superannuation (Objective) Bill 2016.
We support the government’s plan to establish an objective for
our superannuation system. Despite managing more than $2
trillion in assets, the system has never had legislated aims.
Without moorings, the system has provided excessively generous
tax breaks that cost the budget $25 billion each year in lost
revenue, while doing relatively little to support the retirement
incomes of those in need. Ad hoc changes, without clear aims,
have delivered a tangle of rules, limits and exceptions.
A historic view was that superannuation should ensure that capital
is available for investment in Australia. But this is a general
consequence of well-designed savings regime rather than a
particular aim for superannuation. Nor is superannuation required
to fund infrastructure. Only a small fraction of super is invested in
infrastructure, and there is no shortage of funds for infrastructure
assets with proven cash flow.
Instead, super today primarily aims to smooth incomes over a
lifetime. So we support the Government’s proposal that the
primary objective for the superannuation system is to ‘provide
income in retirement to substitute or supplement the age pension.’
This rightly implies that the system should limit support for those
with enough means that they are unlikely to receive even a part
Age Pension. It also implies that superannuation should not
support savings at a high cost to the budget if Age Pension
liabilities are only reduced a little.
Superannuation is just one part of Australia’s retirement incomes
system, alongside the Age Pension and other voluntary savings,
Grattan Institute 2016
including the family home. Even without counting the family home,
most households of any particular age and level of income or
wealth hold more wealth outside super than inside super. The
superannuation system should not aim to fulfil every objective of
the broader retirement incomes system.
So the Committee should reject the view that superannuation’s
objective is to provide an adequate, or ‘comfortable’ retirement
income for all Australians. This view could lead policymakers to
force people to save under the Super Guarantee so that their
incomes while working are less than their incomes in retirement.
This view misleads, because the Age Pension and Rent
Assistance are better tools than super to provide an adequate
retirement for those on low incomes. And this view would support
maintaining generous tax breaks, at substantial budgetary cost,
for those whose retirement will be comfortable without them.
The Committee should also reject suggestions to use the ASFA
‘comfortable’ retirement standard as a benchmark for the system.
This standard supports an affluent lifestyle more luxurious than
most households experience during their working lives. The
average household can only reach the ‘comfortable’ benchmark in
retirement by being less than ‘comfortable’ beforehand.
Although not the focus of the legislation under inquiry, it would be
worthwhile to set objectives for the retirement incomes system as
a whole. These objectives should guarantee some minimum
‘adequate’ standard of living to those at the bottom. They should
help people to maintain a more consistent standard of living
across their lives. And they should allow policymakers flexibility to
use the right combination of policy tools – superannuation, the
Age Pension, and others – to achieve these ends.
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Submission – Inquiry into the Superannuation (Objective) Bill 2016
1 The purposes of superannuation are becoming clearer
Despite assets of more than $2 trillion,1 annual administrative and
management costs of $21 billion,2 and tax breaks on contributions
and earnings costing $25 billion in lost tax revenue each year,3
the superannuation system does not have legislated aims.
System Inquiry argued that ‘funding economic activity is a
consequence of a well-designed long-term savings vehicle that
invests in the interests of its members, rather than an objective in
itself’.6
Originally, the superannuation system was set up to achieve at
least four objectives:4
Similarly, it is not clear that greater superannuation balances are
required to fund infrastructure. Only a small portion of the existing
pool is invested in infrastructure.7 There is no shortage of funds,
from both local and overseas investors, for Australian
infrastructure assets with proven cash flow.8 Investors are
relatively reluctant to support new infrastructure with uncertain
returns.9 However, this reflects the poor risk and return of these
investments, illustrated by a number of high profile failures,10
rather than any shortage of capital.
1. increasing local savings so that Australia was less dependent
on foreign capital for economic stability
2. increasing local savings that could be invested in
infrastructure
3. encouraging people to save more while they are working so
they have more to spend in retirement
4. reducing future government liabilities for the Age Pension.
The first of these aims – creating a pool of Australian capital for
investment in Australia – is less relevant today. It was conceived
in an era that was focused on the ‘twin deficits’ – current account
and budget deficits – and the concern that Australia was overreliant on overseas capital to fund its growth. With the increasing
mobility of international capital, it is less clear that this is a real
economic problem today. While Australian superannuation funds
played a significant role in financing the de-leveraging of
corporate Australia during the global financial crisis,5 the Financial
1
APRA (2016)
Minifie, et al. (2015), p.2.
3
See Super Tax Targeting, Section 2.8.
4
Greenwood (2010)
5
Henry (2009) and RBA (2014), p.171 .
2
Grattan Institute 2016
Instead the superannuation system today is primarily about
consumption smoothing – maintaining a more consistent standard
of living across people’s lives, particularly for middle-income
earners.11 Superannuation encourages people to save while they
are working so they have more to spend in retirement.12 It is well
established that people tend to focus disproportionately on the
short term, leading many to save less for their retirement than is
6
Financial System Inquiry (2015), p.98.
Only 4 per cent of funds managed by APRA-regulated superannuation funds
are invested in infrastructure (APRA (2015), Table 1d).
8
Productivity Commission (2013), p.188.
9
Ibid., p.131.
10
Terrill, et al. (2016)
11
Mirrlees, et al. (2011), p.288.
12
The superannuation system also aims in pension phase to encourage people
to manage financial risks in retirement (Maddock and King (2015)), an issue
beyond this report’s scope.
7
2
Submission – Inquiry into the Superannuation (Objective) Bill 2016
required to maintain relatively consistent consumption levels
across a lifetime.13 Although superannuation leads people to save
less outside of superannuation than they would otherwise, it leads
to higher total savings at retirement (including superannuation).14
Superannuation also requires governments to give up tax revenue
today so that governments do not have to spend so much on the
Age Pension in future. This encourages intergenerational equity
since each generation pays more of the costs of its own
retirement, rather than imposing this burden on the next
generation.
future Age Pension liabilities, subject to the budgetary costs of
doing so.
Implicitly, superannuation should not aim to support the savings of
those who already have such ample resources that they are not
going to qualify for even a part Age Pension. Of course, some of
those that retire without qualifying for the Age Pension may qualify
later in retirement as they draw down on their savings.17
So overall, the superannuation system is designed to promote
retirement savings so that people enjoy a higher standard of living
in retirement, but with less support from government through the
Age Pension, reducing the burden on future taxpayers.
However, superannuation does not and should not aim to provide
limitless support for savings that increase retirement incomes. We
would all like to be rich. But the benefits of higher retirement
incomes must be balanced against the costs of achieving them.15
We therefore support the Government’s primary objective for
superannuation, first proposed by the Financial System Inquiry16,
for the superannuation system to “provide income in retirement to
substitute or supplement the age pension”. The super system
should promote retirement savings so that people enjoy a higher
standard of living in retirement, while reducing government’s
13
Financial System Inquiry (2015), p.4.
Gruen and Soding (2011); Connolly (2007).
15
Daley, et al. (2015), p.16
16
Financial System Inquiry (2015), p.4.
14
Grattan Institute 2016
17
The level of super savings required for a reasonable retirement, and where
taxpayer support might be justified, is discussed in Daley, et al. (2015), Section
3.3.
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Submission – Inquiry into the Superannuation (Objective) Bill 2016
2 Retirement incomes are more than superannuation
2.1
The system has multiple components
Superannuation savings form only part of Australia four-pillar
retirement income system, which is made up of:18
1. Voluntary savings in other assets that can contribute
towards living standards in retirement, such as other
financial assets, and especially housing and other
property.
Figure 1: Superannuation is the least important ‘pillar’ in Australia’s
retirement incomes system
Mean wealth per household by type and age, $ thousands ($2013-14)
600
500
400
2. Compulsory saving through the Superannuation
Guarantee, currently set at 9.5 per cent of wages.
300
3. Voluntary superannuation savings, including voluntary
pre-tax and post-tax super contributions.
200
4. The means-tested Age Pension, provided by
government, which guarantees a minimum ‘safety net’
level of income in retirement.
Age of household
45-54
55-64
65-74
75+
100
0
Many commentators equate retirement savings with
superannuation. But superannuation savings (pillars 2 and 3) are
the least important part of Australia’s retirement incomes system
(Figure 1).
Home
Other assets
Super
Age pension
Source: Super Tax Targeting, Figure 2.1.
18
Some authors identify three pillars in the retirement income system, either by
combining all superannuation savings into one pillar, or separating out
compulsory and voluntary superannuation savings but ignoring voluntary savings
beyond superannuation such as housing assets (see Treasury (2009), p.9).
More recent approaches distinguish between compulsory and voluntary
superannuation savings (Derby (2015), p.17).
Grattan Institute 2016
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Submission – Inquiry into the Superannuation (Objective) Bill 2016
2.2
Non-super savings are larger than super
Superannuation savings account for only a quarter of the wealth
of most households (Figure 2). Even without counting the family
home, the average Australian saves as much outside as inside
the super system.
Figure 3: Most households of each age hold less than half their
non-home wealth in super
Super share of total non-home wealth by age of head of household, per
cent of non-home net wealth
100%
90%
Figure 2: Most Australians save as much outside superannuation
as they do inside, across most ages and levels of wealth
Household net wealth by wealth percentile, age and source, per cent
100%
75%
50%
25%
0%
100%
75%
50%
25%
0%
100%
75%
50%
25%
0%
25-34
35-44
45-54
55-64
65-74
80%
70%
60%
75+
59% 61%
50%
Other
wealth
Business
& trusts
40% Less than 50% of
non-home wealth
30% in super
Other
financial
Other
property
70%
74%
71%
Age group
25 - 34
35 - 44
45 - 54
55 - 64
65 - 74
20%
10%
0%
Home
Super
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
Net worth decile (by age)
Note: Home is net of related mortgage liabilities; Other property is net of other
property loans; business assets and trusts are net of related liabilities; all other
wealth is net of all other liabilities; superannuation assets excludes some defined
benefit schemes.
Source: Grattan analysis of ABS (2015).
25
50
100
0
75
Percentile of households ordered by share of non-home assets in super
Notes: Non-home wealth excludes owner occupied housing and related
mortgage liabilities, but includes investment property equity (net of related
mortgages); superannuation assets excludes some defined benefit schemes;
excludes households with no or negative non-home wealth.
Source: Grattan analysis of ABS (2015).
Some commentators have claimed19 that presenting averages of
household savings, even across narrowly defined age, income
and wealth cohorts, obscures how the majority of households
save for retirement. Yet a closer look at the proportion of
19
Grattan Institute 2016
Industry Super Australia (2016)
5
Submission – Inquiry into the Superannuation (Objective) Bill 2016
particular cohorts that have particular levels of non-super wealth
shows that more than half of households in each age group hold
more than 50 per cent of their non-home wealth outside of super
(Figure 3).
It is true that many of those with little wealth report a larger share
of savings in superannuation than in other assets, but only
because their total savings are small. For such low-wealth
households, the Age Pension will always be their main source of
retirement income.
This analysis includes non-investment assets in net wealth,
notably vehicles and household effects since these assets support
living standards in retirement, either as a potential source of
income, or by providing in-kind services to their owners (what
economists call imputed rents). That’s why they are counted in the
Age Pension assets test. Yet even when these components of
household wealth are excluded many households report
significant non-super assets.
2.3
Non-super savings will remain large
When confronted with facts about the modest contribution of
super to retirement savings, super’s cheerleaders point out that
the system is immature. Compulsory super only began in 1992,
with compulsory contributions of 3 per cent of wages, rising to 9
per cent by 2002 and 9.5 per cent since 2014-15. It will be
another two decades before typical retirees will have contributed
at least 9 per cent of their wages to super for their entire working
lives. So surely super will account for a larger share of household
savings in future?
While we might expect younger households to save more in
super, and less outside, that’s not true in practice. Their assets
Grattan Institute 2016
outside are typically as large as their assets inside
superannuation, even without counting home ownership. This is
so even for households in the 25-34 and 35-44 age groups who
have had high levels of compulsory super for most of their
working lives (Figure 2).20
The enduring importance of non-super savings should come as
no surprise. While compulsory superannuation forces people to
save more via superannuation, there’s little evidence that nonsuper savings have fallen very much in response.
A recent Reserve Bank of Australia study found that each extra
dollar of compulsory superannuation savings was accompanied
by an offsetting fall in non-super savings of only between 10 and
30 cents.21 As a result, compulsory super has added a lot to
private savings in Australia – an estimated 1.5 per cent of GDP a
year over the past two decades.22
There is little reason to expect this pattern of non-super saving to
change radically. Households hold a material portion of their
wealth outside of super so that they have an option to use it
before turning 60, and because they are nervous that government
may change the superannuation rules before they retire.
20
For a more detailed analysis of trends in asset holdings by age, see Daley, et
al. (2016); Daley and Coates (2016); and Daley, et al. (2016).
21
Connolly (2007). That is, there was only a small offsetting fall in other savings
in response to the introduction of the compulsory Superannuation Guarantee.
22
Gruen and Soding (2011)
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Submission – Inquiry into the Superannuation (Objective) Bill 2016
Other asset classes, such as negatively geared property, are
taxed lightly and so will likely remain an attractive vehicle for
accumulating wealth. Whatever the motivation, many households
heading towards retirement have substantial non-super, nonhome assets to draw on.
Grattan Institute 2016
7
Submission – Inquiry into the Superannuation (Objective) Bill 2016
3 Overstating the role of super can lead to poor policy for middle income earners
The fact that many Australians save for their retirement through
vehicles outside of superannuation has important implications for
the amount of superannuation people need for an adequate
retirement. Many people do not rely on just their superannuation
savings to fund an adequate, or even a ‘comfortable’ living
standard in retirement. Rather, most retired Australians draw on a
range of assets to support their retirement – including housing
and other investments outside of superannuation.
3.1
Compulsory savings levels
Ignoring non-super savings may lead policymakers to force
people to save too much through superannuation. For example,
compulsory saving via the Superannuation Guarantee forces
people to save while they are working so they have more to spend
in retirement.
But there is no magic pudding when it comes to superannuation.
Higher compulsory super contributions are ultimately funded by
lower wages, which means lower living standards for
workers today.23
3.2
Replacing the Age Pension
Similarly, the superannuation system should not seek to replace
the Age Pension entirely for all, or even most, retirees. The
budgetary cost of doing so would be crippling. The tax breaks
would cost the budget much more than the Age Pension. To
ensure that a very large number of people didn’t need an Age
Pension, tax breaks would need to support everyone to save
23
Potter (2016)
Grattan Institute 2016
enough to support themselves in retirement beyond average life
expectancy even if they don’t live this long. Given targeting would
not be perfect, there would be substantial tax breaks beyond
those needed to replace the Age Pension for most people.
3.3
Most Australians can already expect an adequate
income in retirement
In fact current levels of compulsory super contributions and Age
Pension are likely to provide a reasonable retirement for most
Australians.
If we project forward the retirement income for a median income
earner working for 40 years, and account for just compulsory
super contributions – in other words, we ignore any voluntary
superannuation contributions and savings outside of super – we
find that today’s 9.5 per cent Superannuation Guarantee and the
Age Pension would provide the average worker with a retirement
income equal to 79 per cent of their pre-retirement wage, also
known as a replacement rate (Figure 4).
About two-thirds of income earners can expect a retirement
income of at least 70 per cent of their pre-retirement income – the
replacement rate for the median earner used by the Mercer
Global Pension Index and endorsed by the OECD.24
24
Mercer (2015)
8
Submission – Inquiry into the Superannuation (Objective) Bill 2016
Figure 4: Under existing super policy, most will largely replace their
pre-retirement income
Replacement rate of pre-retirement disposable income, per cent, based
on 30 year old in 2016
160%
Once non-super savings are taken into account, many workers
are likely to have a higher standard of living when they retire in 40
years’ time than during their working life. This is before factoring
in that many people have lower spending needs in retirement,
particularly in the later stages of life when government covers
much of their largest costs of health and age care.
140%
120%
100%
SG rate increases to
12 per cent
83%
80%
79%
60%
Mercer global pension
plan index targets a 70%
replacement rate for the
median earner – based on
OECD benchmark
40%
20%
Current levels of retirement spending appear to be sustainable.
Most households in retirement only draw down very slowly on
their superannuation and their broader savings. Consequently,
most are likely to leave material bequests.
SG rate stays at 9.5%
0%
1
2
3
4
5
6
Wage deciles
7
8
9
10
Note: Assumes a person who works from age 30 and until age 70, retirement
lasts until life expectancy at 92. Includes only compulsory savings under the
Superannuation Guarantee and the Age Pension. Earnings are assumed to be
6.5 per cent while working and 5.5 per cent in retirement, with an effective tax
rate of 8 per cent on earnings. In retirement, superannuation is draw down
consistent with a CPI-indexed pension with no residual balance at death. Higher
private savings under a 12 per cent SG are offset by lower Age Pension
payments, especially under the new Age Pension assets test.
Source: Grattan analysis of ABS (2015); HILDA (2015).
Grattan Institute 2016
This modelling of the future shouldn’t be a surprise. It matches
what is already happening today. The non-housing expenditure of
retirement-age households today, many of whom did not retire
with any super, is typically more than 70 per cent of that of
working-age households today (Figure 5).
The policy implication is that there is no compelling case to
compel households to save 12 per cent of their income through
the Super Guarantee as currently legislated. This would
effectively compel most people to save for a higher living standard
in retirement than they enjoy during their working lives.
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Submission – Inquiry into the Superannuation (Objective) Bill 2016
Figure 5: Older household replacement expenditure is remarkably
consistent
Elderly household expenditure as proportion of working age expenditure
(excluding housing), percentage
90%
Singles
Couples
80%
70%
60%
50%
40%
30%
20%
10%
0%
10
20
30
40
50
60
Expenditure percentile
70
80
90
Note: Elderly household expenditure is for households aged 60-79 years,
compared to expenditure of working age households aged 25-59 years single
household expenditure, by equivalised expenditure percentile. Expenditure is net
of housing related costs.
Source: Grattan analysis of ABS (2013).
Grattan Institute 2016
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Submission – Inquiry into the Superannuation (Objective) Bill 2016
4 Overstating the role of super leads to inappropriate policy for low income earners
Compulsory superannuation payments help many middle-income
earners to save more for retirement, but super is simply the wrong
tool to provide material support for the retirement of low-income
earners. Our analysis shows super top-up measures for lowincome earners are poorly targeted and an expensive way to help
low-income savers. With the Age Pension and Rent Assistance,
government already has the right tools for assisting lower income
Australians.
4.1
Super can’t help many low income earners much
Superannuation is a contributory system: you only get out what
you put in. And low-income earners don’t put much in. Their
wages, and resulting super guarantee contributions, are small and
their means to make large voluntary contributions are even
smaller. Their super nest egg will inevitably be small compared to
Australia’s relatively generous Age Pension.
For example, a person who works full time at the minimum wage
for their entire working life and contributes 9.5 per cent of their
income to super would accumulate super of about $153,000 in
today’s money (wage deflated), making standard assumptions
about returns and fees. If the balance were drawn down at the
minimum rates, this would provide a retirement income of about
$6,500 a year in today’s money.
By contrast, an Age Pension provides a single person with
$22,800 a year. For someone who worked part time on the
minimum wage for some or all of their working life, super would be
even less, but the Age Pension would be pretty much the same.
4.2
Government provides two super top-ups for low-income earners.
1. The Low Income Superannuation Contribution (LISC):
introduced by the Labor government in 2013, puts extra
money in the accounts of low-income earners who make pretax super contributions. Under the LISC, those earning less
than $37,000 receive a government co-contribution of 15 per
cent of their pre-tax super contributions, up to a maximum of
$500 a year. The Abbott government was set to abolish the
LISC, but the Turnbull government now plans to retain it,
renaming it the Low Income Superannuation Tax Offset
LISTO), at a budgetary cost of $800 million a year.25
2. The Super Co-contribution: introduced by the former
Howard government in 2003, puts extra money in the
accounts of low-incomes earners who make post-tax super
contributions. It boosts voluntary super contributions made by
low-income earners out of their post-tax income by up to $500
a year, at a budgetary cost of $160 million a year.26
4.3
Top ups are not tightly targeted to those that need them
The LISC and the super co-contribution aim to top up the super
and thus the retirement incomes of those with low incomes. But
our research shows about a quarter of the government’s support
leaks out to support the top half of households.
25
26
Grattan Institute 2016
Government provides two top ups for low-income
earners
Commissioner of Taxation (2016)
Ibid.
11
Submission – Inquiry into the Superannuation (Objective) Bill 2016
Whereas eligibility for the pension is based on the income and
assets of the whole household, including those of a spouse,
eligibility for superannuation top ups depends only on the income
of the individual making contributions. That means the top ups
also benefit low-income earners in high-income households. A far
better way to help low-income earners is to increase income
support payments such as the Age Pension.
Super top ups provide some help to households in the second to
fourth deciles of taxpayers. But they do very little for the bottom
10 per cent of those who file a tax return (Figure 6). These
households, many of which earn little if any income, only receive
about 7 per cent of the benefits of top ups. A further set of
households file no tax returns – typically because welfare benefits
provide most of their income. Very few of them receive any
material super top up.
4.4
Some top up is fair for low income earners
Superannuation compels people to lock up some of their earnings
as savings until retirement. High-income earners are
compensated for this delayed access because their contributions
are only taxed at 15 per cent, rather than their marginal rate of
personal income tax.
Without the LISC, which reduces the tax rate on their compulsory
super contributions to zero, those earning between $20,542 and
$37,000 would receive little compensation for locking up their
money in superannuation. The 15 per cent tax on contributions
would be only slightly less than their 19 per cent marginal tax rate.
tax free. Reflecting these concerns, the LISC, reborn as LISTO, is
a fair mechanism so that lower income earners do not go
backwards as a result of super.
Figure 6: A material portion of super top ups goes to well-off
households
LISC spending 800
by household
income decile, 600
$ millions
400
200
0
Co-contribution 200
spending by
household
150
income decile, $
millions
100
1
2
3
4
5
6
7
8
9
10
50
0
1
2
3
4
5
6
7
8
9
10
Equivalised household income deciles
Note: Household income is constructed using the taxable income of the tax filer
and that reported by the filer for their spouse. This household income for couples
is equivalised by dividing total income by 1.5. Only includes entitlements for
individuals who lodge tax returns.
Source: Grattan analysis of ATO (2016).
And for those earning less than $20,542, the absence of a LISC
would take them backwards when they made super contributions
taxed at 15 per cent rather than keeping the money in their pocket
Grattan Institute 2016
12
Submission – Inquiry into the Superannuation (Objective) Bill 2016
4.5
There are better tools to provide adequate retirement
incomes for low-income earners
However super top ups should not be expanded. It is too hard to
target them tightly at those most in need, and super fees can eat
up their value.
Instead, a targeted boost to the Age Pension would do far more to
ensure all Australians have an adequate retirement. But there is
an even better way to improve the retirement incomes of those
most in need.
As previous Grattan research shows, retirees who do not own
their own homes are the group at most risk of being poor in
retirement. A $500 a year boost to rent assistance for eligible
seniors would be the most efficient way to boost retirement
incomes of the lowest paid, at a cost of $200 million a year.27 Only
2 per cent of it would flow to the top half of households, with net
wealth of more than $500,000.
By contrast, a wholesale $500 boost to all Age Pension recipients
would cost $1.3 billion, with half the benefit going to households
with net wealth of more than $500,000, mainly because the home
is exempt from the Age Pension means test.
27
Daley, et al. (2016)
Grattan Institute 2016
13
Submission – Inquiry into the Superannuation (Objective) Bill 2016
5 Super should not aim to provide a ‘comfortable’ lifestyle in retirement
The Committee should also reject suggestions that the ASFA
‘comfortable’ retirement standard should be the benchmark for
retirement incomes. As we showed in Super tax targeting, the
ASFA ‘comfortable’ standard amounts to an ‘affluent’ lifestyle in
retirement more luxurious than most households experience
during their working lives.28
Such a high living standard is an inappropriate benchmark for the
retirement incomes system. The fact that many households aspire
to this level of retirement income29 is irrelevant. We would all like
to be rich. Average living standards before retirement are less
than the ASFA comfortable benchmark. Consequently, the
average household can only reach the ‘comfortable’ benchmark in
retirement by living less than comfortably before retirement.
High income earners will not be able to expect a retirement
income from super alone that replaces 70 per cent of their preretirement income. But replacing a percentage of the income of
high income earners has not in fact been suggested as a
benchmark by either Mercer or the OECD. Instead, both aimed to
replace the income of a median income earner.
And in practice, high income earners in Australia are typically
replacing their pre-retirement expenditure, presumably utilising
non-super savings (Figure 5).
28
29
Daley, et al. (2015), p.30.
State Street Global Advisors and Rice Warner (2015), p.5
Grattan Institute 2016
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Submission – Inquiry into the Superannuation (Objective) Bill 2016
References
ABS (2013) Household Expenditure Survey 2011-12 CURF,
Australian Bureau of Statistics
ABS (2015) Microdata: Income and Housing 2013-14, Australian
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